By Quinn W. Gray, Esq.

Trott Law, P.C. *

USFN Member (IN, MI, MN)

For nearly 250 years, tax foreclosure sales have been used to help recover delinquent property taxes in the United States. In Pung v. Isabella County, the U.S. Supreme Court affirmed the validity of such sales and rejected an argument that threatened to disrupt foreclosure practices nationwide.

In 2004, the Pung family believed they would receive a property tax exemption for their home in Isabella County, Michigan. The County revoked the exemption and when the family refused to pay back taxes, the County began foreclosure proceedings.

Before the tax foreclosure sale, the County determined the property was worth $194,400. The property sold for just $76,008 and was resold 18 months later by the purchaser for $195,000.

A member of the Pung family filed a lawsuit challenging the validity of the tax foreclosure process, and in February 2026, the U.S. Supreme Court considered the following questions:

1.     Should the measure of compensation paid to a tax foreclosed party be based on the fair market value of the property, or the value obtained at the tax foreclosure sale?

2.     Does the tax foreclosure of a property worth more than the taxes owed constitute an excessive fine?

Pung suggested that compensation should be measured by a property’s fair market value at the time of foreclosure, and any tax foreclosure of a property worth more than the taxes owed is an excessive fine. The lack of precedent supporting these arguments proved to be fatal.

In the Court’s nearly 250-year history, it has never stated that a fair market value analysis is appropriate in this context. Nor has it ever construed taxation as a fine. Rather, several cases cited by the Court support opposite conclusions.

In siding with the County, the Court held that the appropriate measure of just compensation is the price obtained at the tax foreclosure sale, so long as the sale is fairly conducted. The Court also agreed with the County on the excessive fine question. The Court remanded the case to the 6th Circuit for further proceedings consistent with the opinion.   

The Impact of this Opinion

By rejecting Pung’s argument, the Court confirmed that governments may continue to use tax foreclosures as a debt collection tool, but potential issues on remand could still impact foreclosure practices.

Notably, in Pung’s merits briefing and at oral argument, he suggested that the County should have attempted to recover the unpaid taxes by less drastic means, such as seizing and selling Pung’s personal property.

In Justice Thomas’s concurrence, he questioned the County’s decision to sell the property. While this issue was not before the Court, Thomas made his thoughts on the process very clear. “What Isabella County did to the Pungs was wrong, and, on my initial view, likely unconstitutional.”

For more information, you can view the full opinion here.

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USFNews - June 24, 2026